Wilmar links loan to sustainability performance

Palm oil producer Wilmar International has partnered with ING to convert a portion of its existing revolving credit facility of US$150 million with the bank into a sustainability performance-linked loan. This makes it the first company in Asia to work together with ING to couple its sustainability performance to a loan.

Wilmar has committed to improve aspects of its environmental, social and governance performance. Progress will be measured by Sustainalytics, a provider of environmental, social and corporate governance research and ratings, which will track the company’s performance for a customised package of different environmental, social and governance (ESG) indicators. If the performance milestones are met, the interest rate for part of the loan will be reduced for the following year.

“Sustainability is a priority at Wilmar, and we are constantly seeking improvements in our sustainability performance,” said Ho Kiam Kong, chief financial officer for Wilmar. “Our collaboration with ING dovetails Wilmar’s commitment to a responsible business. We believe that incorporating sustainability metrics into every aspect of our business, from daily operations to corporate financing, is key to creating value for our stakeholders.”

The concept for this sustainability loan heralds a new approach for the green loans industry by encompassing not just environmental, but also social and governance aspects. Not only is it aimed at sustainability leaders; by providing a financial incentive, it is also for corporations who are keen to improve their ESG performance. Furthermore, the concept is suitable for companies who are at different stages of their sustainability journey as it can be customised according to their requirements.

ING has worked with eight clients in Europe on similar sustainability improvement loans since March 2017. These include syndicated deals with a health technology company, a chocolate and cocoa producer as well as a bilateral loan with a gas and electricity company.

“We are delighted to bring this innovative sustainability product to our customers in Asia Pacific,” said Gerrit Stoelinga, CEO for ING Wholesale Banking Asia. “We appreciate the commitment and market leadership from Wilmar to get on board with the concept. We have a strong pipeline of sustainability deals and will continue to find innovative ways to empower and support our clients in their sustainability journey.”

Image credit: ©iStockphoto.com/Cristian Baitg